Bochnowski v. Peoples Federal Sav. & Loan Ass'n

Citation571 N.E.2d 282
Decision Date16 May 1991
Docket NumberNo. 64S04-9105-CV-369,64S04-9105-CV-369
CourtIndiana Supreme Court
Parties, 125 Lab.Cas. P 57,336, 6 IER Cases 778 Thomas S. BOCHNOWSKI, Appellant, v. PEOPLES FEDERAL SAVINGS & LOAN ASSOCIATION, David A. Bochnowski, President, Chief Executive Officer and Director; William L. Kennedy, Director; Harold G. Rueth, Director; Leroy A. Cataldi, Director; Gloria C. Gray, Director; Lourdes M. Dennison, Director; John J. Wadas, Jr., Director; Appellees.

DeBRULER, Judge.

This cause comes to us on a petition to transfer from the First District Court of Appeals. The issue presented is whether a cause of action for tortious interference with an employment relationship can be maintained upon a contract terminable at will. The trial court below granted appellees' Motion for Summary Judgment stating that the evidence presented to the court demonstrated that there was no genuine issue of material fact and that appellant had failed to state a valid claim against Peoples Federal Savings and Loan Association. A divided Court of Appeals affirmed. Bochnowski v. Peoples Federal Sav. (1988), Ind.App., 530 N.E.2d 125 (Ratliff, J., dissenting). For the reasons set forth below, we now grant transfer and reverse.

Appellant Thomas Bochnowski left his employment with Peoples Service Agency, a subsidiary of Peoples Federal Savings and Loan Association, in the fall of 1981. Appellant had worked in the area of real estate appraisal, but because Peoples Service was phasing out its real estate appraisal activities, appellant was working predominantly in the area of insurance. In order to get back into the real estate appraisal business, appellant went to work for Vernon Lee of Vernon Lee and Associates. In March of 1982, appellant's brother, Michael Bochnowski, left Peoples Service and started his own insurance and real estate appraisal business called Bochnowski Agency, Inc. The two brothers were partners in this agency.

In May of 1982, David Bochnowski, President of Peoples Service Agency, Chief Executive Officer and Director of Peoples Federal, and a cousin to appellant and Michael, wrote a letter to Vernon Lee informing Lee of appellant's involvement in the Bochnowski Agency. Peoples Federal relied upon Vernon Lee to do a good deal of its real estate appraisal work. As a condition of his employment with Lee and Associates, appellant had agreed not to accept any outside appraisal work. David Bochnowski's letter informed Vernon Lee that Peoples Federal would terminate its relationship with Lee and Associates unless it received Lee's personal assurance that appellant would not be involved in any way with appraisals assigned by Peoples Federal to Lee and Associates. David Bochnowski feared that because appellant had access as an appraiser for Lee and Associates to Peoples' customer lists, he would be able to utilize these lists to steal insurance clients from Peoples for the Bochnowski Agency. Lee and David Bochnowski temporarily resolved this issue through an agreement whereby Lee agreed that appellant would no longer be allowed to do any appraisal work involving Peoples Federal. Nonetheless, in the spring of 1982, Peoples Service Agency initiated litigation against appellant.

Lee would occasionally inquire as to the status of this litigation involving appellant. In December of 1983, David Bochnowski urged Lee to do whatever he could do to get the parties together to resolve the dispute. Subsequently, at Lee's suggestion, the parties to this litigation held two meetings in early January of 1984 in an effort to settle this matter. At the conclusion of these meetings, all parties were optimistic that a settlement had been reached and that only minor details and legal formalities remained. Appellant reported this to Lee and asserted that an agreement had been reached and its final conclusion was imminent. On June 29, 1984, however, David Bochnowski wrote a letter to Lee in which he stated that a settlement had not been reached. In this letter, David also asserted that appellant was again doing Peoples Federal appraisal work in violation of their agreement.

This letter prompted a meeting between Lee, appellant and David Bochnowski. At the conclusion of this meeting, an exasparated Vernon Lee issued an ultimatum to appellant. Lee informed appellant that he had two options: He could resolve the matter by settling the litigation with Peoples Federal or he could terminate his employment with Lee and Associates. Lee gave appellant two weeks to make his decision. The result was that at the end of this two-week period, Lee and appellant severed their employment relationship.

In September of 1984, appellant filed suit against Peoples Federal Savings and Loan Association alleging damages of ten million dollars. Appellant's complaint asserts that Peoples Federal maliciously conspired to bring about his discharge from Vernon Lee and Associates. Appellant maintains that while the Peoples Savings Agency suit against appellant was pending, David Bochnowski kept in constant contact with Vernon Lee and threatened Lee with the loss of business and other unknown sanctions unless appellant settled the litigation. Appellant alleges that as a result of these malicious and coercive acts, he was discharged from his employment with Lee and Associates.

On September 15, 1987, the trial court granted Peoples Federal's second motion for summary judgment and dismissed appellant's claim. The trial court found that none of the material in the record supported appellant's claim against Peoples Federal or its individual board of directors.

The Court of Appeals affirmed the trial court's order granting summary judgment. The court stated that an action for tortious interference with a contractual relationship cannot be maintained in Indiana without a valid and enforceable contract and that a contract terminable at will cannot form the basis of an action for interference with a contractual relationship. Bochnowski, 530 N.E.2d at 126 (citing Stanley v. Kelley (1981), Ind.App., 422 N.E.2d 663). The Court found that appellant failed to show that he had a contract of employment upon which to maintain his cause of action as he was an employee at will. Id.

Appellant now brings this petition to transfer, contending that the Court of Appeals majority erred when it concluded that an employee with a contract terminable at will does not have the right to bring a cause of action for tortious interference with his employment relationship. Our resolution of this issue makes it unnecessary to consider appellant's other claims of error.

It is well settled that intentional interference with a contract may be an actionable tort. This doctrine is recognized virtually everywhere as to any contract, regardless of its character. Prosser, Law of Torts Sec. 129 at 930 (4th ed. 1971). As noted above, however, Indiana courts have held that contracts involving at will employment relationships cannot form the basis of a claim for interference with a contractual relationship. Bochnowski, 530 N.E.2d at 126, Stanley, 422 N.E.2d 663. In Stanley the Court of Appeals stated:

Where there is no promise on the part of the employer that employment will continue for a definite period of time and no binding promise on the part of the employee that he will continue in the employment, the employment relationship is terminable at will and, therefore, the contract of employment is unenforceable with respect to that which remains executory. Shaw v. S.S. Kresge Co. (1975) 167 Ind.App. 1, 328 N.E.2d 775. Such a contract, terminable at will, cannot form the basis of an action for interference with a contractual relationship. Grimm [v. Baumgart ], supra [ (1951), 121 Ind.App. 626], 96 N.E.2d at 918.

Stanley, 422 N.E.2d at 667 (footnotes omitted). This reasoning has been rejected by the vast majority of states. See e.g., Lewis v. Oregon Beauty Supply Co. (1986), 302 Or. 616, 733 P.2d 430, Elbe v. Wausau Hospital Center, 606 F.Supp. 1491 (W.D.Wis.1985), Smith v. Klein (1985), 23 Ohio App.3d 146, 492 N.E.2d 852, Bachand v. Connecticut General Life Ins. Co., 101 Wis.2d 617, 305 N.W.2d 149. We likewise reject this reasoning.

The parties in an employment at will relationship have no less of an interest in the integrity and security of their contract than do the parties in any other type of contractual relationship. The United States Supreme Court recognized this as far back as 1915, stating:

The fact that the employment is at the will of the parties, respectively, does not make it one at the will of others. The employe[e] has manifest interest in the freedom of the employer to exercise his judgment without illegal interference or compulsion and, by the weight of authority, the unjustified interference of third persons is actionable although the employment is at will.

Truax v. Raich, 239 U.S. 33, 38, 36 S.Ct. 7, 9, 60 L.Ed. 131, 134 (1915). The overwhelming majority of cases agree with the statement that, until a contract terminable at will is terminated, it constitutes a valid and subsisting agreement that is presumed to continue in effect. Prosser, Sec. 129 at 932-33. While a party to an at will contract may have a right to terminate the contract, "[u]ntil he has so terminated it, the contract is valid and subsisting, and the defendant may not improperly interfere with it." Restatement (Second) Torts Sec. 766 comment g (1979). Thus any intentional, unjustified interference with...

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